Petronet LNG Ltd plans power foray with Rs 3500 crore plant

NEW DELHI: Petronet LNG Ltd, a privately-registered firm promoted by state-run companies for importing liquid gas, will make its foray into the power sector with a Rs 3,500 crore plant in joint venture with Kerala government.

Petronet and the state government are close to signing the agreement for setting up the 1,200 mw plant near the company's upcoming gas import terminal at Kochi, sources said. Kerala will purchase three-quarters of the power from the plant under a long-term offtake agreement, while the rest may be traded in the open market. The state is also providing land which will be taken as part of its equity contribution.

Petronet will use liquid gas it has tied up from Australia as fuel. Power is expected to cost less than Rs 7 per unit. This makes the project attractive for Kerala as the state buys power from private firms at Rs 11 per unit. For Petronet , the project will ensure acaptive consumer for the expensive Australian gas. It had in 2009 signed a pact to buy 1.5MT of gas at a price 14.5% higher than prevailing international oil prices.